Frontera Energy Corporation has closed on a $100 million USD revolving letter of credit facility with group of Colombian and international financial institutions, the Canadian oil company announced today.

In addition to collateral benefits, the funds “will be used to provide letters of credit to fund exploration and transportation commitments in Colombia and Peru,” said the Toronto-based company in a statement.

Frontera Energy said that this line of credit, which has an initial term of eight months as a secured credit facility, is being used to replace Frontera’s current secured letter of credit, which includes $81.9 million USD of used capacity that will mature on June 22.

Following the initial eight months, the term of the credit facility is expected to be extended to two years “upon satisfaction of certain extension conditions,” according to Frontera Energy. The provision of the new arrangement will thereby “allow Frontera to release collateral and reduce the company’s cost of funds,” stated the firm.

“During the initial term, the credit facility will have substantially the same security, covenants, and events of defaults as the [current facility] and the company’s senior secured notes due 2021,” added Frontera. “Upon satisfaction of the extension conditions, the credit facility will become an unsecured facility and the guarantors under the credit facility will be limited to the Company’s principal subsidiaries.”

While the company, which has operated as an oil producer Colombia for decades, previously under the name Pacific Rubiales, has emerged from the worst of its financial and operational difficulties of recent years, challenges remain to improving its financial results.

In the first quarter of 2018, with $249.5 million USD in sales and a net loss of $3.1 million USD, it saw year-over-year declines in both profitability and oil production (which fell by around 5,000 barrels per day compared to the first quarter of 2017).

“The new facility further strengthens our balance sheet, credit profile and long-term access to capital,” said David Dyck, chief financial officer of Frontera Energy. “This gives us great confidence as we continue to position ourselves for growth in 2018.”

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Jared Wade is editor in chief of Finance Colombia. He is a Bogotá-based journalist with 15 years of experience covering topics including business, financial services, Latin America, and sports. Email him at jared.wade(at) financecolombia.com or follow him on Twitter at @Jared_Wade.